Public Employment Programs

Two public employment programs affected the labor market during the
period of economic reforms between 1975 and 1987. The Minimum Employment
Program (Programa de Empleo Mínimo--PEM) was created in 1975 at a time
when unemployment had reached record levels. The program, administered
by local governments, paid a small salary to unemployed workers, who,
for a few hours a week, performed menial public works. At first, the
government tightly restricted entry into the program. Gradually, most of
these restrictions were lifted, and a larger number of unemployed people
were allowed to participate. Thus, the proportion of the labor force
employed by the program remained virtually constant between 1977 and
1981, despite the economic recovery and a reduction in the real value of
PEM compensation.

When Chile entered a new and more severe recession, the number of
individuals employed by PEM in the Metropolitan Region of Santiago
increased from about 23,000 in May 1982 to 93,000 in May 1983. An
Employment Program for Heads of Households (Programa de Ocupación para
Jefes de Hogar--POJH), created in October 1982, employed about 100,000
individuals in the greater Santiago area by May 1983. The two programs
combined absorbed more than 10 percent of the labor force of the greater
Santiago area in May 1983. These programs were also implemented in other
regions of the country. The PEM program was cut back drastically in
February 1984. Likewise, by December 1988, there were only about 5,000
individuals employed by the POJH in the entire country.